US concerned about Chinese investment in Indo-Pacific region

Alice G Wells

US civil and military officials are skeptical about Chinese policy and investment in the Indo-Pacific and stepped up Washington's efforts to expand its engagement on a rule-based system for the mutual benefit of the countries in the region.

They said that the US is concerned that Chinese investment and activities are undermining sovereignty and economic stability in the region and will also encounter America's vision of a free and open Indo-Pacific.

“In many cases, Chinese investment has harmed rather than helping the economic wellbeing of communities within the region by burdening the governments with unsustainable debts and funding projects that have no commercial job creation value,” Alice G Wells, US principal deputy assistant secretary at the Bureau of South and Central Asian Affairs, told a group of South Asian journalists during a media tour to the US recently.

During the tour, journalists from Bangladesh, India, Nepal and Sri Lanka took part in a reporting tour titled “Amplifying the Indo-Pacific Strategy” and had interactions with senior officials of the US Department of State, the Department of Commerce, the USAID, defence and strategists at the Pentagon, the US Indo-Pacific Command, the US Pacific Command in San Diego and Hawaii and members of the intelligentsia of East-West Centre in Washington and Honolulu, RAND's Centre for Asia Pacific Policy, Milken Institute, and the Pacific Council on International Policy.

They warned that Chinese credit could lead to debt trap and undermine sovereignty in the long run. They said the Belt and Road Initiative lacked transparency and was aimed at fulfilling China's own security and strategic interests rather than promoting economic development.

In an apparent bid to counter the Chinese economic influence, US Secretary of State Mike Pompeo has launched new initiatives to help private investment in collaboration with US partners. The Trump administration also rolled out new programmes on regional organisations.

At the Asean regional forum, Secretary Pompeo announced nearly $300 million in additional security assistance including funding for a Bay of Bengal initiative that would allow the countries in South and Southeast Asia to share shipping information with other partners and improve detection and response to emerging threats.

President Trump recently signed into law the Build Act (Better Utilisation of Investments Leading to Development Act) to create a new international development finance corporation that will have $60 billion as investment portfolio capacity. The Build Act will also allow the US to work with the European Investment Bank, with the Australians and the Japanese and it is now negotiating with the Indians.

Wells said Washington believes in transparent and open competition to generate the kind of investment the region needs to promote economic growth free of coercion and destabilising obligations.

A US military official, on condition of anonymity, said the US is no way trying to create a US versus China.

“We don't want to create a choice between any two nations. We're trying to create an open environment where nations are free to choose what's right for them and what's right for the future.”

The US official said the One Belt, One Road initiative is itself in favour of what the Chinese Communist Party is looking for, not necessarily always in the benefit of a greater community of nations.

Wells, who visited Dhaka and Cox's Bazar recently, said Bangladesh is critical to the US in so many ways.

The US is the largest export destination for Bangladesh and the largest foreign direct investor in the country and the two countries have close cooperation in peacekeeping and fighting terrorism.

“We enjoy a very robust relationship,” Wells said.

In recognition of Bangladesh's valuable role, the US will provide an additional $40 million to enhance its coastal radar system, modernise patrol-boat fleet, and provide training and support its expanded maritime interdiction, which is part of the US's Bay of Bengal initiative.